PGA Tour, Discovery Sign Mega-Deal

By Rick Young Created: June 6, 2018

Rick Young

Rick Young

EQUIP AND BIZ

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MEXICO CITY, MEXICO - MARCH 04: Phil Mickelson greets fans after winning the final round of World Golf Championships-Mexico Championship on a playoff hole against Justin Thomas (not in frame) at Club De Golf Chapultepec on March 4, 2018 in Mexico City, Mexico.

The PGA Tour brand and its related assets — players, tournaments and extended library of content — is on the cusp of an unparalleled global expansion of media properties with the potential to reach digital screens in 220 countries and territories in 50 different languages.

As business deals go put this one into the blockbuster category.

Commissioner Jay Monahan announced Monday that the tour had entered into a strategic 12-year alliance with Discovery Inc., owners/operators of speciality channels such as Discovery Channel, HGTV, Food Network, TLC and Animal Planet to create an all-encompassing “international golf service” that will include global television and multi-platform live rights to all PGA Tour-related media properties outside of the United States; a new tour branded, Discovery-developed video-streaming service for worldwide golf fans, and premium content via the six tours the PGA Tour owns and operates, including Mackenzie Tour-PGA Tour Canada, along with 40 PGA Tour events with an uptick of feature added content to The Players Championship, FedEx Cup Playoffs and the Presidents Cup.

Increasing PGA Tour brand awareness worldwide is the obvious endgame here while regionalizing and highlighting the tour’s wide array of international players in the process.

Positioned as “a new global Home of Golf” (one wonders if the Royal & Ancient GC of St. Andrews might have something to say on this with St. Andrews Links also being referred to as ‘the Home of Golf’) the upside of this new alliance for international consumers will be the delivery of 2,000-plus hours of live annual PGA Tour-related content.

Discovery is not going into this without experience or business savvy relating to sports properties. Currently, the Silver Spring, Md.-headquartered media brand is home of the Olympics throughout Europe and maintains sporting interests throughout the European market via its Eurosport assets.

The deal between Discovery, Inc. and the PGA Tour is slated to begin in 2019 and run through to 2030. Canada will be one of the first countries impacted beginning January 1, 2019.

Neither side announced any financial terms although one glaring number does provide some context for the scope of this relationship. According to a news release, Discovery is expected to invest $2 billion (US) over the life of the agreement. That will be accomplished incrementally with annual gradual increases.

“This is an exciting next step for the PGA Tour, which presents a tremendous opportunity to accelerate and expand our media business outside the United States, better service our international broadcast partners, and drive fan growth with a deeply experienced strategic global partner,” said Monahan in the release. “It also will deliver more value to our sponsors as it presents a tremendous opportunity to engage new and diverse audiences around the world.”

While the partnership’s focus is squarely on multi-platform live rights, both sides acknowledge existing opportunities for Discovery’s portfolio of pay-TV and free-to-air channels as well as its own digital and short-term platforms to showcase the PGA Tour’s massive library of non-live and library rights.

There are no indications this deal will have any effects on the PGA Tour’s domestic partnerships with NBC-Golf Channel or CBS when the contracts with those networks end in 2021 but it adds a unique dynamic to that next round of television rights negotiations.

“Following our successful first Olympic Games in Pyeongchang, Discovery will contribute its strong global reach, in-market relationships, global sports expertise and strong television and direct-to-consumer platforms and brands to create a valuable new long term offering in every market outside the U.S.,” said David Zaslav, Discovery’s president and chief executive officer. “Today is a fantastic day for golf fans around the world as Discovery proudly partners with the PGA Tour to create the new global Home of Golf.”

Assuming the reigns of this new initiate is Alex Kaplan, former executive vice-president, commercial for Eurosport Digital. He has been named president and general manager of the Discovery-PGA Tour portfolio. A full management team under Kaplan will be named at a later date.

With content capability moving to another level across all of the properties, the Mackenzie Tour should stand to benefit. To what level, however, was not readily apparent. I reached out to Craig Smith, the PGA Tour’s senior director, public relations for comment.

“There is opportunity for greater exposure by nature of the strategic alliance to benefit tour properties across the board and the creation/distribution of exciting new content,” Smith wrote back in an email. “A stated objective is to focus on how fans consume golf in each market, so compelling product can be created accordingly to help grow interest and exposure.”

What this deal also means is a rather dramatic change to the PGA Tour’s non-U.S. broadcast rights as each contract comes up for renewal. Having handled this internally since 2007, the tour will now have Discovery managing international distribution through this strategic alliance completely by 2024.

Shaw Communications’ deal for rights to PGA Tour events on Global TV, including the 30-minute series, This is Mackenzie Tour-PGA Tour Canada, expires at the end of this year, as does the one year live-streaming deal the PGA Tour did with DAZN in Canada for broadcast rights to carry live coverage of more than 30 PGA Tour events to subscribers this season. It would come as no surprise to me if Discovery used upcoming Canadian rights negotiations as a benchmark when it sits down with other countries.

Australia, Italy, Japan, Netherlands, Portugal, Russia and Spain also have contracts with the PGA Tour set to expire at the end of 2018.

“There is no impact to existing agreements. This newly created business division will manage rights as current deals expire,” Smith added.

A number of questions remain with respect to this deal but one thing seems certain: With this landmark agreement, the PGA Tour, in partnership with Discovery, is looking to capitalize on the expanded opportunities presented by the digital tier.